By Doug Tenney, Leist Mercantile
While cycling sold recently in North Carolina in what I deemed to be familiar territory, I (oops) “left the planned route.” Realizing my phone showed 10% battery life and that I was lost was not my most shining moment. My new navigation means became a conversation with a DoorDash driver, a local fire department, and a nice lady working in her yard. Fortunately, I was just 5 miles short of my destination. Since I had alerted Cindy of my dilemma, she once again got to “wonder” as I “wandered.” No need to worry, just wait. The same advice followed by producers, prepared and anxious to plant.
Puzzling and perplexing accurately describes the situation of soybean trading activity on Friday, April 12. Literally out of nowhere, soybeans mid-morning were up 20 cents, and closing up 14 cents. Numerous research reports literally had no explanation of what was taking place and were unable to put forth fundamental reasons for the rally. Finally, some reports suggested the rally was due to Middle East tensions and rising crude oil prices.
Traders were disappointed with the April 11 WASDE (Supply and Demand) Report which detailed no changes in Brazil soybean production at 155 million tons and the Brazil corn production at 125 million tons. CBOT grains were lower on report day as July CBOT corn was $4.41, down 4 ¾ cents while July CBOT soybeans closed at $11.72 ½, down 5 ½ cents. This year, July CBOT corn has had a high of $4.93 ¾, with the low at $4.22 ¼. Year to date, July CBOT soybeans have been high at $13.05 ¼, while the low was $11.61 ¾.
The Brazil crop reporting agency, CONAB, estimated soybean production in April at 146.522 million tons, down from their March estimate at 146.8 million tons. CONAB estimated Brazil corn production at 111 million tons, down slightly from March.
Traders and producers alike continue to grow in their frustration with USDA at the very slow speed of lowering their Brazil crop production estimates for both soybeans and corn in spite of the weather extremes from November into February which detailed excessive rains in southern Brazil and Argentina while central and northern Brazil had much below normal rains. CONAB has been reducing their production estimates in recent months, but more than USDA. In fact, the difference between USDA and CONAB has been widening, not shrinking.
At this writing the second week of April, very little corn planting progress has transpired both nationwide and in Ohio. The April 8 Weekly Crop Progress Report detailed that the U.S. had planted just 2% of the corn, matching the 5-year average for that date. Ohio’s corn planting progress was delayed as it registered a dash or zero in that same report.
In addition, commodity prices that same week revealed higher price activity in other commodity sectors — the U.S. dollar reached its highest level since November 2023, gold and copper reached a 10-month high, while crude oil reached its highest level in 6 months.
Brazil was an extremely active seller of soybeans that week as on April 11, they sold 10 cargoes of soybeans to China while Argentina sold 2 cargoes of soybeans to China. The following day, Brazil sold 10-15 cargoes of soybeans to China, with Argentina selling 2 cargoes of soybeans to China. One cargo of soybeans typically is 1 million to 2 million bushels. That same week, the U.S. had 3 days of soybean sales to unknown destinations (China?) which totaled 502,000 tons or 18.4 million bushels. Three previous sales of U.S. soybeans took place on March 20, Feb. 27, and Feb. 1 with destinations of either Mexico or unknown. Note that U.S. export sales of soybeans to other countries is currently not a frequent event.
China imported 5.5 million tons of soybeans in March, down 20% from last year. Imports for January to March reached 18.5 million tons, down 11% from last year. USDA projects that China will import 105 million tons of soybeans this marketing year, September 2023 to August 2024. Here’s an important fact to remember. USDA no longer relies on Chinese customs data to estimate soybean imports. Instead, USDA relies on vessel counts from exporting nations to calculate import totals.
Look for weather and planting progress report to be the main price drivers for corn and soybeans into early June.
Thought for the day. “Truth is like the sun. You can shut it out for a time, but it ain’t goin’ away.” – Elvis Presley.
